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Check-cashing stores have dotted the landscape in recent years. Once a novelty found only in poor neighborhoods or as a part of a pawn shop, check cashers have entered the mainstream of society. Why the boom in this industry? It has a high profit margin and less risk than you think. A typical check-cashing store merely cashes a check for a customer without a checking account or one who is out of town and needs money. Opening a small business cashing checks is easier than you may think. With some planning and enough capital, you can carve your portion of this lucrative business model.

1. Draw up a comprehensive business plan that includes cash flow procedures, collection methods, payroll and other expenses, expansion plans and an overview of your organization. List your business entity type. To avoid personal liability, many similar business owners form a limited liability company.

2. Hire a CPA to draft an financial statements on the pending company demonstrating it has adequate funding to operate such a business. You may be required to post a bond for the protection of the public and to verify your authenticity. Consult with your state's secretary of state or banking commissioner to verify this step in the process.

3. Apply for an Employer Identification Number at the Internal Revenue Service website at IRS.gov. This number allows you to hire employees, withhold payroll taxes and establish a business checking account.

4. Register your business with the state Secretary of State's Office and with your city government. Each may have license fees and procedures regarding check-cashing regulation and monitoring.

5. Locate a storefront in a high-traffic area. Consider that your customers will largely be people needing money and travelers when selecting a site. Consider site security in the process, too.

6. Purchase office equipment and furniture. Install a safe and a security system for protection of your assets.

7. Create a procedure manual for your employees that includes required forms of identification, check-verification instructions and other best practices. Verify these items with your local prosecutor's office. Some states require a thumbprint on checks over a certain amount to prevent money laundering.

8. Design your collection procedures. Verify with your attorney the steps allowed in your state for collection from times you are allowed to call to small-claims court summons. Establish an automated clearinghouse requirement for returned checks that allows you to draft from the customer's checking account in the event of a returned check.

9. Establish a fee structure within state law. Many states allow for a fee of up to 10 percent to cash a personal check and a lesser amount to cash government checks.

10. Consider offering payday and car title loans as a way to diversify your revenue. Follow similar procedures in setting up these services.

Tips

Capture images of your customer for identity verification in court.

Advertise heavily on college campuses and social media.

Warnings

Verify everything you can and do not be afraid to refuse service for a client you can't positively identify or verify.

Consult with your attorney regarding federal banking regulations as you draft all of your procedures and marketing materials. Do not discriminate against any protected class.